Evaluating Financial Distress Condition Of Private Commercial Banks In Ethiopia

A robust banking system is obviously one of the pillars of a financial system of any economyrnspecially a country like Ethiopia its financial sector mainly dominated by commercial banks. Thernbanking system in Ethiopia showing progress in performance and almost all banks are reportingrnpositive profit and ensures a sustainable economic development and welfare by forming adequaterncapital and allocating funds efficiently for investment projects, payment services, strong financialrnsystems. This study strives to assess the financial distress condition of private commercial Banks inrnEthiopia for the period 2012-2019. The analytical tool used in the study is the Altman’s bankruptcyrnprediction model of 1993. The result showed that the studied private commercial banks on averagerncategorized under ‘Gray Zone’. Specifically, Abyssinia, Dashen, Hebret, Awash, Wogagen, Addis,rnZemen and Anbesa bank were categorized under ‘Gray Zone’ while the remaining seven banksrnnamely: Abay, Berhan, Buna, Nib, Oromia International and Cooperative bank of Oromia banksrnwere categorized under ‘Distress Zone’. Therefore, banks categorized under distress zone needsrnto take corrective actions in order to avoid bankruptcy.

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